Erik O. Kimbrough

Side-payments and the costs of conflict

Conflict and competition often impose costs on both winners and losers, and conflicting parties may prefer to resolve a dispute before it occurs. The equilibrium of a conflict game with side-payments predicts that with binding offers, proposers make and responders accept side-payments, generating settlements that strongly favor proposers. When side-payments are non-binding, proposers offer nothing and conflicts always arise. Laboratory experiments confirm that binding side-payments reduce conflicts. However, 30% of responders reject binding offers, and offers are more egalitarian than predicted. Surprisingly, non-binding side-payments also improve efficiency, although less than binding. With binding side-payments, 87% of efficiency gains come from avoided conflicts. However, with non-binding side-payments, only 39% of gains come from avoided conflicts and 61% from reduced conflict expenditures.

When parity promotes peace: Resolving conflict between asymmetric agents

Due to the high costs of conflict both in theory and practice, we examine and experimentally test the conditions under which conflict between asymmetric agents can be resolved. We model conflict as a two-agent rent-seeking contest for an indivisible prize. Before conflict arises, both agents may agree to allocate the prize by fair coin flip to avoid the costs of conflict. The model predicts that “parity promotes peace”: in the pure-strategy equilibrium, agents with relatively symmetric conflict capabilities agree to resolve the conflict by using a random device; however, with sufficiently asymmetric capabilities, conflicts are unavoidable because the stronger agent prefers to fight. The results of the experiment confirm that the availability of the random device partially eliminates conflicts when agents are relatively symmetric; however, the device also reduces conflict between substantially asymmetric agents.

Norms Make Preferences Social

We explore the idea that prosocial behavior in experimental games is driven by social norms imported into the laboratory. Under this view, differences in behavior across subjects is driven by heterogeneity in sensitivity to social norms. We introduce an incentivized method of eliciting individual norm-sensitivity, and we show how it relates to play in public goods, trust, dictator and ultimatum games. We show how our observations can be rationalized in a stylized model of norm-dependent preferences under reasonable assumptions about the nature of social norms. Then we directly elicit norms in these games to test the robustness of our interpretation.

Why Can’t We Be Friends? Entitlements and the Costs of Conflict

We design an experiment to explore the impact of earned entitlements on the frequency and intensity of conflicts in a two-stage conflict game where players may attempt to use non-binding side-payments to avoid conflict. In this game, Proposers make offers and Responders decide simultaneously whether to accept the offers and whether to engage in a conflict. A simple theoretical analysis suggests that Proposers should never offer side-payments because Responders should always accept them and then still choose to enter conflict; however, our experiment reveals that some individuals use this non-binding mechanism to avoid conflict. Moreover, when subjects earn their roles (Proposer or Responder), conflicts are 44% more likely to be avoided than when roles are assigned randomly. Earned entitlements impact behavior in three important ways: (1) Proposers who have earned their position persistently make larger offers; (2) larger offers lead to a lower probability of conflict, but (3) Proposers whose offers do not lead to conflict resolution respond spitefully with greater conflict expenditure. Hence, with earned rights, the positive welfare effects of reduced conflict frequency are offset by higher conflict intensity. This result differs from previous experimental evidence from ultimatum games in which earned entitlements tend to encourage agreement and increase welfare; thus, our findings highlight the important consequences of endogenizing the costs of conflict. Our analysis suggests that earned entitlements alter behavior by influencing the beliefs of Proposers about the willingness of Responders to accept a peaceful resolution. As a result, these Proposers make persistent high offers, and when their beliefs are disappointed by a Responder’s decision to accept a side-payment and still enter conflict, they retaliate.

Measuring the Distribution of Spitefulness

Spiteful, antisocial behavior may undermine the moral and institutional fabric of society, producing disorder, fear, and mistrust. Previous research demonstrates the willingness of individuals to harm others, but little is understood about how far people are willing to go in being spiteful (relative to how far they could have gone) or their consistency in spitefulness across repeated trials. Our experiment is the first to provide individuals with repeated opportunities to spitefully harm anonymous others when the decision entails zero cost to the spiter and cannot be observed as such by the object of spite. This method reveals that the majority of individuals exhibit consistent (non-)spitefulness over time and that the distribution of spitefulness is bipolar: when choosing whether to be spiteful, most individuals either avoid spite altogether or impose the maximum possible harm on their unwitting victims.

Why Can’t We Be Friends? Entitlements, Bargaining, and Conflict

We design an experiment to explore the impact of earned entitlements on the frequency and intensity of conflicts in a two-stage bargaining and conflict game with side-payments. In this game, residents (Proposers) make side-payment offers and contestants (Responders) decide whether to accept the offers and whether to engage in a conflict. When subjects earn their roles, conflicts are 44% more likely to be avoided than when roles are assigned randomly. Earned rights impact behavior in three important ways: (1) residents who have earned their position persistently offer larger side-payments; (2) larger offers lead to a lower probability of conflict, but (3) residents whose offers do not lead to conflict resolution respond spitefully and exhibit greater conflict expenditure. Hence, with earned rights, the positive welfare effects of reduced conflict frequency are offset by higher conflict intensity.

The Social and Ecological Determinants of Common Pool Resource Sustainability

We study a dynamic common pool resource game in which current resource stock depends on resource extraction in the previous period. Our model shows that for a sufficiently high regrowth rate, there is no commons dilemma: the resource will be preserved indefinitely in equilibrium. Lower growth rates lead to depletion. Laboratory tests of the model indicate that favorable ecological characteristics are necessary but insufficient to encourage effective CPR governance. Before the game, we elicit individual willingness to follow a costly rule. Only the presence of enough rule-followers preserves the resource given favorable ecological conditions.

Do Market Incentives Crowd Out Charitable Giving

Donations and volunteerism can be conceived as market transactions with a zero explicit price. However, evidence suggests people may not view zero as just another price when it comes to pro-social behavior. Thus, while markets might be expected to increase the supply of assets available to those in need, some worry such financial incentives will crowd out altruistic giving. This paper reports laboratory experiments directly investigating the degree to which market incentives crowd out large, discrete charitable donations in a setting related to deceased organ donation. The results suggest markets increase the supply of assets available to those in need. However, as some critics fear, market incentives disproportionately influence the relatively poor.

Geography and Social Networks in Nascent Distal Exchange

We design an experiment to explore how geography shapes exchange between spatially distant markets and hypothesize that geographical isolation of traveling intermediaries from stationary sources of production creates social isolation that hinders trade. We characterize our economies with a system of equations derived from Adam Smith: exchange drives specialization, which in turn fuels more exchange, the coupling of which increases welfare. Measures of sociality and the extent of social network exploitation significantly contribute to improved efficiency. We further find that those economies which are the wealthiest are also the most equitable.

Kinship, Fractionalization and Corruption

We examine the roots of variation in corruption across societies, and we argue that marriage practices and family structure are an important, overlooked determinant of corruption. By shaping patterns of relatedness and interaction, marriage practices influence the relative returns to norms of nepotism/favoritism versus norms of impartial cooperation. In-marriage (e.g. consanguineous marriage) generates fractionalization because it yields relatively closed groups of related individuals and thereby encourages favoritism and corruption. Out-marriage creates a relatively open society with increased interaction between non-relatives and strangers, thereby encouraging impartiality. We report a robust association between in-marriage practices and corruption both across countries and within countries. Instrumental variables estimates exploiting historical variation in preferred marriage practices and in exposure to the Catholic Churchs family policies provide evidence that the relationship could be causal.